Respected energy soothsayers Cornwall Insight reckon that fattening pipelines of imminently delivered onshore wind and newly commissioned solar farms stand to add 8GW of capacity to the bidding park for the fourth round of Contracts for Difference.
Bidding in ARD4 will take place over the winter.
Cornwall’s latest ‘Renewables Pipeline Tracker’ calculates that eligible onshore wind is up to around 5GW, a 20% rise for the technology since AR3 bids went in a year ago.
Over the same period, eligible solar has surged to 3GW, up by 1.8GW. Not yet offered for planning approval – and thus currently ineligible – , a further 6GW of solar PV looms on the horizon.
James Brabben, Cornwall Insight’s head of assets and infrastructure, said, “With around four months to go until eligibility deadlines, the pipeline could increase further, especially from solar PV with its typically quicker lead times for planning approval.
“By December, we could therefore have a record level of new-build renewables looking to bid into the CfD round, creating some interesting decisions for new-build plants.
“Depending on budget and MW cap parameters in the auction, some projects may deem it unlikely they will be competitive in the CfD. As a result, they may look to alternative routes to market options such as utility Power Purchase Agreements (PPAs) or Corporate PPAs (CPPAs).
“Some generators may also look to find an edge by incorporating other revenues, including those available through balancing services markets or different business models such as co-location with batteries.
“Although there are alternative options available to new build generators, these are still challenging, and the bankability of the CfD contract is likely to incentivise solar and onshore wind generators to bid into the AR4 process.
“The lack of costs or bid bonds in AR4 participation would also support this view, with generators potentially seeing the auction as a “free hit” to enter and find out if prices materialise at a level suitable for their project returns.
“We therefore expect very high levels of auction competition and a potential stalling in the development of other routes to market options such as utility PPAs and CPPAs if generators crowd the CfD and only look at alternatives post-auction in spring or summer 2022.”